tv On the Money With Maria Bartiromo NBC January 27, 2013 2:30am-3:00am EST
thanks for stopping in. we are "on the money." i'm maria bartiromo. coming to you this week from davos, switzerland, where the world's economic forum is taking place. the mood of davos, where will the global economy go next and what will it mean to your portfolio as the u.s. stock market sets a new five-year high. i'll have any candid conversation with outspoken jpmorgan chase ceo jamie dimon. we'll talk real estate, banking, his pay cut. >> we had run terrible year. and she's called the oprah of china. remarkable entrepreneur who runs a media empire and reaches more than 200 million people a month. "on the money" begins right now. this is america's number one financial news program, "on the money."
now, maria bartiromo. >> this is what's making news as we head into a new week "on the money." washington has a new watchdog for wall street. president obama has nominated mary jo white the head of securities and exchange commission. white is a former prosecutor with a reputation for toughness. she will replace mary schapiro and must still be confirmed by the senate. timothy geithner spent his last day as secretary on friday, stepping down after a tumultuous four years in the financial system. president obama's chief of staff jack lew has been nominated to replace geithner. every time you turn around the market seems to be setting a new five-year high. the dow jones industrial average rose this week thursday and up ten the last of 11 days, while the s&p 500 followed suit. the markets continued up on friday. the markets were happy about a battle that seems to be postponed now. the house extended the nation's
borrowing limit until may 19th. the bill now heads to the senate where the vote is expected in the next few days. mixed news on the earnings front to tell you about. apple had disappointment with the revenue miss and guidance feel short, mostly because of slower iphone sales. among other technology sales, ibm and google beat expectations as did microsoft and netflix. there aren't a lot of people out there who were right about what would happen over the last five years, but harvard university professor ken rogoff was. he was on the money with some very accurate predictions about the economy, about where the markets would go post financial crisis. what's next for america and the global economy? ken rogoff joining me once again with some answers. ken, good to see you. >> good to see you. >> thanks so much for joining us. how would you describe the mood in davos and how would you see the economy today five years post the crisis? >> it's a strange mood in davos, where people are not euphoric. in fact, you talk to heads of multinational corporations,
businesspeople around the world, they say, you know, things aren't even as good as i thought they would be this quarter, but they're calmer. there's a feeling that the world is not going to fall apart. you hear more about geopolitical risk, cyber security, and less about europe's going to blow up tomorrow. >> so, you're not seeing over enthusiasm but it's certainly better than a year ago? >> yes, it's definitely, definitely calmer. their theme here is resilient. yes, and dynamism, not so much. guess what i thought about the global economy. i actually think that growth will be moderate with not necessarily a lot of volatility around that. that it might be better, might be worse. >> see, i'm hearing a lot of positives about the u.s. economy if washington can get its act together, but europe is still a big issue. what do you think about europe right now? have we made progress and what's to come? >> well, i think there's some big long-term things they need to do in europe over the next five to seven years.
they clearly have bought time with what mario draghi did, but they've done some structural forums. they've raised their pension ages. they've done labor market reform. nothing has happened in the united states. actually nothing. there's reasons for optimism from the shale. people are excited talking about that. and there's some optimism coming from the easy money, i suppose, still. but i think in the united states, you know, if we get to the consensus, which needs to be 3% at the end of the year, i think that would be good. >> let me ask you about the economy, relative to what's going on in washington. we know this week that the house voted to extend the debt ceiling for a few months. we still face the sequestration and the continuing resolution. how does this play out? >> forever. >> feels like that. >> forever. they don't agree. so we're seeing an overlay of this, you know, one side the republicans, the other side the democrats. and i must say post-election, president obama has become more
aggre aggressive. military spending, they don't agree with what taxation should be, title, on and on and on. gun control, they don't agree. and on the other hand, you know, we have this sort of slow economy that makes it more difficult to cut a deal. and i should add to that, a constitutional crisis in a way because this whole debt ceiling has been a weapon that the house of representatives have used to gain power. it's not just the republicans versus the democrats. it's the house versus the president. i don't know how it the play out. >> meanwhile, the marketses are on fire. the s&p 500 hitting a new five-year high along with the dow jones industrial average. what is driving the stocks and do you think it's sustainable for the year? >> the part of it that i understand is that some of the risk has been pulled out of the market. so most recently that the u.s. has got three months before the next thing happening. some of the risks. and maybe just the election was determined and people aren't necessarily happy, some are, some aren't. but it's solved.
take some uncertainty away. markets don't like uncertainty. so even though it wasn't very likely the european would fall apart, even though it wasn't very likely the u.s. would fall on its debt, pulling it out of the equation lifted markets a lot. >> meanwhile, new appointment, in the obama administration. timothy geithner, last day was on friday as treasury secretary. what kind of grade would you put on his performance and then his successor. he definitely served as tumultuous time, geithner. >> i would give him an "a." there are things i think he would have done better, yes. do i want to relive the financial crisis and try out my theory? no. i think he has to get credit, the economy moves back on its feet. on the other hand, you know, there are many challenges ahead because we're still huge unemployme unemployment, we still don't have a clear path to fast growth. so it's very much unfinished business. >> jack lew, what's your take?
new treasury secretary coming? >> i don't know him, maria, so it's hard for me to have any personal judgment. i was surprised by it. it's not something i was expecting. i'm a complete outsider. a little bit of a feel that president obama knows what he wants to do and is looking for someone to get it through congress, to fight these battles and not so much for to give him new direction. >> ken, it's good to have you on the program. >> pleasure. >> thank you so much. up next, we're "on the money," how would you feel about take an $11 million pay cut? >> i think it's appropriate and the board had a very tough decision to make. >> my conversation with jpmorgan chase ceo jamie dimon about his compositi composition, the housing market, and the u.s. economy. and is the world big enough for two oprahs? i'll talk to the woman known as china's oprah who is a media mogul in her own right. as we take a break, look at how the stock market ended the week.
make no mistake about it, jamie dimon says what he says and means what he says. i spoke with the chairman and ceo of jpmorgan chase about the economy, about housing, and his cut in pay. >> news last week was that you took a pay cut as a result of the london whale trading loss. >> uh-huh. >> would you say now that this issue is officially behind you or are there still ramifications around the london whale? >> first, i didn't take one, i was given one. >> you were given a pay cut. >> which i think is appropriate. and the board had a very tough decision to make to balance the good of the company. we had a record year and a bad. we had one terrible mistake in the year. look, we fixed the problem from a financial risk for the most part. we've disclosed both the company report and a completely independent board report with
independent outside advisers and counselors, et cetera. the regulators, of course, will have their reviews to do so there will be more ongoing things from that, but we've mostly got the problem behind us. we cleaned up cio and we should change procedures to make sure we manage the company properly going forward. >> so what kind of changes might we expect going forward in terms of changing the bank, restructuring how the governance is done? >> look, i'm very proud of jpmorgan. last year we had 1.8 trillion of capital or credit from consumer or businesses. we had a problem. you know, we've addressed this this in the public. the rest of the bank is pretty well controlled and pretty well managed. it's the same bank from 2008, 2000, 20 10, 2011. whenever a company makes a mistake, analyze it and try to be better for it and make sure you apply best practice across the company. most of the mistake was in cio. >> let me ask you about the u.s. we saw that mortgage originations were up huge for
you in the quarter. you talking a lot in the last couple of years now about housing really showing some improvement and having bottomed. where are we in that? what are you expecting in the next couple of years in terms of housing? >> housing has total li bottomed. it's getting better. you saw today sales come so far down they're in short supply in certain markets. all the indicators. 3 million a year, cheaper to buy than to rent. all time affordability because price is lower. mortgage rates are like 3.5%. but it's not going to be an absence in the economy. i really think about this point the economy will drive housing. >> what are you expecting elsewhere in terms of the regulatory environment? we're all wondering how this plays out, how the vogel rule plays out? what if it materializes and forces a separation from proprietary trading and plain vanilla deposit? >> that's not the volcker rule. >> nobody is doing proprietary
trading. i always remind the public we had the widest, most transparent capital in the world. i'm not opposed to the intent of the volcker rule. the question is let's make sure when we finish we have the wi widest, deepest in the world. we serve 20,000 customers. give them great price, capital, advice, execution when they come to us because we give them a good price, just like walmart gives you a good price. we do a lot of it. that's a good thing. it keeps the cost of issuance and the cost of buying cheap. who does it keep cheap for? retirees, pensions, municipalities, korpgs. >> in terms of the federal reserve, how do you offset this difficulty in terms of making money in such a low rate environment? >> one of the funny things here, i keep hear that the banks have benefitted from low rate environment and subsidized because of low rate environment, which isn't true. we told the world it squeezes
our netting, $5 million a year. reverse side to that, rates will go up one day and we'll get that back. we're investing the business if it were normal environment. we know right now margins are lower. it's just like the you were running a pizza shop and the post of mozzarella is liar you wouldn't stop selling pizzas because the margin is higher. we try to be long term. >> what policies create jobs? that's what we're trying to figure out? >> i think it's fairly consistent that we have done -- the grand bargain. it doesn't have to be exactly the one that anyone wants, that show that america can make decisions. it set a more effective tax system. it reduced tax uncertainty going forward. i think we could have a booming environment. i may be wrong. that's my own personal belief. if we have a grand bargain, americans take off. the rest of the world needs us to be strong. europe still has its issues and it will for a couple of years. so i think it's important that america kind of take the lead
here. i'm hoping in congress, that's what they do. >> what does your gut tell you about all of this money moving into stocks recently? we had a fantastic year in 2013. do you think this is sustainable? >> yeah, the economy grows, it's sustainable. and i think buy american company is pretty good prices. these are world class companies. not just america, european and japanese and chinese companies, but you are still buying them at fairly good prices. the return is not that good. i'm comfortable owning stocks right now. >> my thanks to jamie dimon. the state of business, the state of investors and the state of europe is all part of the conversation here at davos this week. this citi ceo to a billionaire philanthropist, here's what they had to say. >> our strategy to me is really focused around the big secular things going on in the world, globalization, urbanization, digitization. if you think of globalization, you look at what's going on in
the economy, most of the growth is coming from the developing countries. >> the markets, they're recovering. investors had something like 15% increase in the 401(k) plans last year. housing prices have recovered. the net wealth are increasing the confidence of investors to participate and there's obviously rotation from bonds to equities. >> there's a general sense of let's say euphoria that practice is over. i think that is somewhat premature because the fundamental internal inconsistencies in the system have not been at best. up next, we are "on the money" and so is yang lan, the woman china calls oprah, how her generation is reinventing china. and you can find
china is certainly the topic of conversation. everyone is trying to figure out what's going on in the country. how has your week been? >> well, it has been terrific. i'm meeting so many people and updated by information on so many different fronts. of course, china is a hot topic. actually, this is, i think, the most important and critical period of time in chinese history. we do look forward to our new generation of state leaders can move this country forward to be more open, democratic, and giving people more choices and opportunities. >> but now you do read mixed messages all the time, so sometimes i'm confused myself. >> do you think that we will see a more open china? >> i think so. >> someone was telling me about the equivalent of twitter, that's a social media in china. is that making a difference? >> definitely. i think technology is providing the largest public arena for honoring chinese people to give them a voice. so i think, you know, when people are talking about where
china will go, i think there's only one sensible orientation, which is to be more open and democratic. >> now, you have how many follow followers? >> i have 45 million. i try to -- try to make some good changes. >> people comment about social media allowing people to let off steam. is it doing that? >> definitely. definitely. also they're contributing to the social and economic progress of the country by disclosing corruption, by debating on public policies, from traffic to housing to education to medical services. and, also, it's great fun and entertainment. you see people very creative, but especially young people. i always enjoy reading their comments, things like that. >> that is fantastic. you're a self-made entrepreneur. so impressive. several television shows. growing media empire. the company that you manage, hence the oprah comparison.
>> it's a compliment. i have a lot of admireation for her because of what she has done to empower women. i have a lot of admireation. >> who is your audience? >> i have two shows. "yang lan 101" is a more in-depth show with movers and shakers around the world. i've interviewed more than 600 leaders around the world, including many u.s. presidents and secretaries of state, and my other show "her village" is more like oprah show plus "the view" because i have two other younger women who provide different perspectives on certain issues that women care for. we have celebrities as well as women telling their extraordinary stories. >> are there professional opportunities and are they growing for women in china? >> oh, definitely. actually, you know, in china, about 48% of the workforce are
women. about -- more than half of college attenders and the graduate school students are women. about 30% of business school students are women and 30% of entrepreneurs are women. so chinese women are becoming a very critical voice in the associate tell. >> and what's your take on china today in terms of whether it's slowing down, this transition from an export-led economy to a consumer economy? is that on track, how would you characterize it? >> you know, i think that people have different ideas and expectations about the pace of transition. but there's no issue that everyone believe that we have to go through this structural change of economic productivity to be more environmentally friendly, to be more sustainable, to be more value-added is definitely the way to go.
i think to make people spend more and save less is to provide them with a more complete social and medical welfare. so that people will feel safe to spend the money. >> sure. big saver of community. good to have you on the program. >> thank you, maria. thank you for having me. >> good to see you. >> thank you. up next, a look at the news this week that will be have an impact "on the money." and then the art of coming together to solve the world's problems. the themes of davos offer tranquility on the mountain.
for more on our show and our guests, check out the website, otm and follow my me on twitter and on google plus, follow me at maria bartiromo. and the stories coming up in the week ahead that may impact your money and impact the markets. busy week ahead for economic and earnings news to tell you about. we'll get earning news from boeing, exxonmobil, chevron, and facebook. on monday, pending home sales will be released. then on tuesday, the kay shirrer home price index will be out. on wednesday, the federal reserve will wrapped a two of day meeting with policy and interest rates. and the first reading on gross domestic products in the first quarter of the year as typically a market mover as is the report on friday, the all important jobs report sure to move the markets. we'll be watch that. it has been quite a week here in davos where solving the world's problems is a
state-of-the-art. abstract artist created a series of collages for the world economic forums congress center main hall. it's called the tranquil labyrinth. they represent the progress of growth. a colorful theme for an event that stresses cooperation and innovation. that's the show for today. thank you so much for joining me. i'll see you back in new york. next week, the business of broadway, seeing greene in the bright lights of broadway. keep it right here where we are "on the money." have a great weekend, everybody. i'll see you again next weekend.